ERISA Bond - Inflation Guard

[Mother Bond]

What is the purpose of the Inflation Guard endorsement on an ERISA bond? Is it always recommended or are there cases in which it's not necessary?

[marietta68]

The purpose of the Inflation Guard endorsement is to minimize minor changes to the bond amount as the benefit plan's assets grow. The endorsement requires that the original bond be written in an amount that complies with the Dept of Labor's ERISA requirements - minimum of 10% of plan assets. As long as that mandate is met, the amount of coverage available under the bond will meet the ERISA requirement, up to $500,000. The endorsement is always recommended, unless the bond amount is $500,000, which is the maximum amount required by the DOL (unless it issues a special order for a specific plan).

[Surety Queen]

The purpose of the Inflation Guard endorsement is to minimize minor changes to the bond amount as the benefit plan's assets grow. The endorsement requires that the original bond be written in an amount that complies with the Dept of Labor's ERISA requirements - minimum of 10% of plan assets. As long as that mandate is met, the amount of coverage available under the bond will meet the ERISA requirement, up to $500,000. The endorsement is always recommended, unless the bond amount is $500,000, which is the maximum amount required by the DOL (unless it issues a special order for a specific plan).

Please remember that the Inflation Guard Endorsement does not cover growth of plan assets as a result of a consolidation of plans - only by normal contributions.